DTEKs coal subsidiaries to increase mining by 11% yoy in 2012

DTEK (DTEKUA) plans to produce 40 mmt of coal in 2012, the company’s CEO said on Feb.22. This figure represents a 74% jump to 2011 output, and an 11% yoy increase over the combined output of the five mining subsidiaries now controlled by DTEK, two of which became part of DTEK at end-2011. According to the CEO, DTEK is planning to spend up to UAH 5 bln (more than USD 600 mln) in CapEx on coal mining annually by 2017.

Roman Topolyuk: If it meets its target, DTEK would mine 48% of all coal in Ukraine in 2012, compared to 28% in 2011, considerably strengthening its dominant position on domestic coal market. Projected CapEx for coal mining represents more than third of DTEK’s total planned investments in the coming years, which is around USD 1.5-1.6 bln p.a. in total. We estimate that the energy holding will need to raise additional debt financing of up to USD 200-300 mln to cover investment needs. We estimate DTEK’s net debt/EBITDA at close to 0.9x on 2012E EBITDA, providing sufficient room for attracting new funding.